Tax would do damage to economy

Between now and Nov. 4, Nevada voters will decide where they stand on Question 3, the margins tax initiative. Proponents of the tax measure are running television ads that make false and misleading claims about this tax measure.

As the spokeswoman for the NO on 3 campaign, I would like to set the record straight and explain what the margin tax would really do.

One of the proponents’ ads claims that the initiative would require “only the largest corporations” to pay a new 2 percent tax. That statement is patently false. According to research from one of the state’s leading economists, Question 3 would affect more than 16,000 Nevada businesses (“Nevada Margin Tax Impact Analysis,” RCG Economics, August). These are mostly small businesses such as family farms, neighborhood restaurants and coffee shops.

Small businesses would be required to pay the margins tax even in years when they have no profits. That’s why it is opposed by the National Federation of Independent Business- Nevada, representing 2,000 small businesses statewide.

Two percent may not sound like a lot, but because this tax would be applied to gross revenue, not profits, it is the equivalent of a nearly 15 percent corporate income tax. That’s nearly twice as high as the corporate income tax rate in California and would make Nevada one of the five highest-taxed states in the country for businesses.

A significant portion of this nearly $800 million tax increase would be passed on to Nevadans through higher prices for everything from food, clothing, gasoline, utilities, housing, insurance, health care and other goods and services. If only half of the $800 million were to be passed on, it would increase annual living costs for a typical Nevada family by more than $350 per year (Economic Impacts Study, RCG Economics, August 2014).

Question 3 is so badly written that it does not even exempt health care. This tax would be imposed on doctors, hospitals, pharmacies and other health care providers. That would increase the costs Nevada consumers pay for health care, and it could force some hospitals and providers to cut services, reducing Nevadans’ access to needed procedures and care (Health Care Impacts of Question 3, Jeremy Aguero, Applied Analysis, August).

The ad also claims that every cent collected will go directly to fund our schools. That is an empty promise. There is no guarantee that we will actually see an increase in school funding as a result of those dollars.

It is true that the revenue from this massive tax increase would be deposited in Nevada’s Distributive School Account, or DSA, which is used to fund education. But Nevada has a long history of depositing earmarked money into the DSA and subsequently reducing the general fund dollars in the account. Even the proponents’ own attorney admitted before the Nevada Supreme Court that there is no guarantee the measure would increase education funding (Francis C. Flaherty, Nevada State Education Association attorney, Dec. 5, 2012, Nevada Supreme Court).

This poorly designed measure has absolutely no guidelines or plan of action on how any funds that might go to schools would be spent. Moreover, under the laws controlling state education funds, none of the revenue from Question 3 could be used to build more classrooms or other school facilities.

By imposing this huge new tax proposal on both large and small employers, Question 3 would severely damage Nevada’s economy, cause the loss of nearly 9,000 existing jobs, and make it very difficult to attract new businesses and jobs to our state (Job Impacts Study, Jeremy Aguero, Applied Analysis, April).

As the mom of two kids, I want my children and all Nevada kids to receive the education they deserve. But this costly, deeply flawed measure does not ensure a better education for our kids. What it would do is hurt thousands of Nevada’s small business owners and major employers, damage our state’s economy, cause the loss of thousands of jobs and increase costs for Nevada families.

That’s why our statewide coalition representing tens of thousands of small and large employers, business and labor organizations, taxpayer advocates and health care providers urge a “no” vote on 3.

Karen Griffin is spokeswoman for the Coalition to Defeat the Margins Tax Initiative.